Unlike other special journals such as the purchases journal or the sales journal, the cash ledger book records debit and credit entries in the form of an account, and therefore providing control accounts are not being used in the general ledger, can also be classified as a subsidiary ledger.

Types of Cash Book

Cash book ledgers come in many different forms depending on the requirements of the business. Normally the ledger will have receipts recorded on the left hand side (debit entry) and payments recorded on the right hand side (credit entry). In a larger business due to the high number of transactions, and the requirement to segregate the duties of accounting staff, the cashbook might be sub-divided into two ledgers or journals referred to as the cash receipts journal, and the cash disbursements journal, also referred to as the cash payments journal.

Irrespective of the number of sub-divisions, each page of the cash book can have a number of formats from single column to multi-column, with the most popular being two and three column formats as detailed below.

Single Column Cash Book

The single column cash book uses one column on each side of the cash book to record either the receipt of cash on the left hand side (debit), or the payment of cash on the right hand side (credit).

For simplicity, the single cash ledger book diagram below shows only one side of the cashbook, in this case the left hand, receipts side (debit). The right hand, payments side (credit) would be identical in structure and format.

The first three columns in the diagram are the date, transaction description (Desc.), and ledger folio reference (LF) and are common to all cashbook formats. The single column referred to in the name of this cash ledger book is the monetary amount of the cash receipt (Cash) highlighted in gray.

Single Column Cash Book

Debit

Date

Desc.

LF

Cash

The other side of the cash book would be headed ‘Credit’ and show an identical format with the single column representing the monetary amount of the cash payment.

Two Column Cash Book

The two column cash book uses two columns on each side of the book. Depending on the nature of the business involved the two columns can be used for different purposes.

Cash and Discount Columns

The business can use the additional column to operate as a discounts journal and record details of discounts allowed on the cash receipts side of the cash book and discounts received on the cash payments side of the cash book. In this case the second column is headed ‘Discount’.

Again, for simplicity, the two column cash ledger book diagram below shows only one side of the cash book, in this case the left hand receipts side (debit) .

The first three columns are the same as the single column cash book and show the date, transaction description (Desc.), and ledger folio reference (LF). The two columns referred to in the name of this cashbook are the monetary amount of the cash receipt (Cash), and the monetary amount of the discount allowed (Discount) both highlighted in gray.

Two Column Cash Book with Discount Column

Debit

Date

Desc.

LF

Cash

Discount

The other side of the two column cash ledger book would be headed ‘Credit’ and show an identical format with the two columns representing the monetary amount of the cash payment and the monetary amount of the discount received.

It should be noted that when the cash book is used as a subsidiary ledger the discount column is still not part of the double entry. The column simply lists the discounts as with any other book of prime entry, and the total of the column is posted to the general ledger discount allowed or received account as appropriate at the end of the accounting period.

Cash and Bank Columns

Alternatively the business can use the additional column of the two column cash ledger book to operate as a bank journal and record details of bank account transactions. In this case the second column is headed ‘Bank’.

Again, for simplicity, the two column cash ledger book diagram below shows only one side of the cashbook, in this case the left hand receipts side (debit).

As before the first three columns in the diagram are the date, transaction description (Desc.), and ledger folio reference (LF). The two columns referred to in the name of this cashbook are the monetary amount of the cash receipt (Cash), and the monetary amount of the receipts into the current bank account of the business (Bank), both highlighted in gray.

Two Column Cash Book with Bank Column

Debit

Date

Desc.

LF

Cash

Bank

The two column cash ledger book is sometimes referred to as the double column cash book or the 2 column cash book.

Three Column Cash Book

The three column cash book uses three columns on each side of the book. This format in effect combines both two column formats discussed above in that it uses the additional columns to record both discounts and bank account transactions.

Again, the three column cash ledger book diagram below shows only one side of the cashbook, in this case the left hand receipts side (debit).

As before the first three columns in the diagram are the date, transaction description (Desc.), and ledger folio reference (LF). The three columns referred to in the name of this cashbook are the monetary amount of the cash receipt (Cash), the monetary amount of the bank receipts (Bank) and the monetary amount of the discount allowed (Discount) all highlighted in gray.

Three Column Cash Book

Debit

Date

Desc.

LF

Cash

Bank

Discount

The other side of the three column cash ledger book would be headed ‘Credit’ and show an identical format with the three columns representing the monetary amounts of the cash payment, bank payment, and discounts received.

The three column cashbook is sometimes referred to as the triple cash book, treble cash book or the 3 column cash book.

Summary

The cash ledger book can act as both a journal and a ledger and comes in various formats. The most common examples are the single, two and three column cashbooks, however, it is possible to have multi-column cash books, such as the petty cashbook, which can be used to provide further analysis of receipts and payments.

Last modified July 16th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.